All three of our broad stock market indices made new weekly highs today, but only the S&P 500 and NASDAQ closed the day in positive territory. We are at the center of our current reversal zone (Oct. 8 - 25), so this market may be getting ready to rollover for some sort of correction.
It now looks very much like the DOW started a new medium-term cycle on Sept. 20, but it could still be an older cycle. For now, let's go with the idea of a new cycle. If that is the case, this index could be quite bullish and could rally to a new all-time high, even into December. A break above the all-time high of 35,631 would support that scenario. But even a new cycle can turn bearish. We are expecting a correction now, and if that correction falls below the start of the new cycle (33,613), then either the new cycle is turning bearish or an older cycle is completing its final bottom. In both cases, this index could be down for many more weeks. Let's wait and see if we get a correction now and how low it will go.
The S&P 500 also looks like a new and young cycle off the low of Oct. 4 (4,279). As with the DOW, that could be bullish if the all-time high (4,546) is exceeded soon. But this new cycle could also turn bearish if it breaks below that Oct. 4 low (or it too could be an older cycle making its final bottom). We will now watch for a correction from a high in this week's reversal zone and see if that support at 4,279 can hold.
The NASDAQ may have started a new medium-term cycle on Oct. 4 at 14,182 or it may have started a new cycle on Aug. 15 at 14,424. In the first case, this index could be very bullish if it can exceed its all-time high of 15,403, but if it doesn't do that soon, it could turn also turn bearish if it breaks clearly below that Oct. 4 low. In the second case (the cycle starting on Aug. 15), we already know the index has turned bearish because it has already broken below 14,424. As with the other two indices, we will now wait for a corrective drop. If it can stay above 14,182, there is hope for a bullish rally into the end of the year. Otherwise, we should be getting ready to sell the market short.
We are staying on the sidelines of the broad stock market for now.